According to Nikkei, the price of Bitcoin has dropped more than 10% in recent days as widespread protests rocked Kazakhstan, one of the world’s top crypto mining hubs. According to CoinDesk, the Bitcoin price hovered around $42,000 on the night of January 7, down from more than $48,000 at the end of 2021.
The hash rate, a measure of the total computing power used to mine cryptocurrencies, fell on Thursday after the Kazakh government ordered a top telecommunications provider in the country to cut off access to it. nationwide internet. The move comes in response to fierce protests over the high prices of liquefied petroleum gas, the fuel used by many motorists in Kazakhstan.
However, internet access is also required for Bitcoin mining and trading. The hash rate was down 15% year-to-date through January 6. Many crypto miners have moved to Kazakhstan to take advantage of the country’s cheap electricity, after China banned crypto mining in May 2021. According to the Cambridge Center for Alternative Finance, Kazakhstan accounted for about 18 percent of the global hash rate as of August 2021, second only to the US.
Kazakhstan accounts for about 18% of the global hash rate as of August 2021, second only to the US
Prolonged internet outages could force Bitcoin miners in Kazakhstan to shut down or move elsewhere. However, internet access is not the only problem facing cryptocurrency miners in the Central Asian country. In fact, demand for electricity has outstripped supply in the country for a while, leading to emergency power outages and forced division of power. Some argue that energy-intensive cryptocurrency mining is the cause of the current turmoil.
“Miners may be transferring Bitcoins from storage to trading accounts so they can lock in profits,” said Yuya Hasegawa, market analyst at Tokyo-based crypto exchange Bitbank. speak. About 5,000 Bitcoins were moved in and out of accounts held by cryptocurrency miners.
The chaotic situation in Kazakhstan has highlighted the potential for geopolitical risks that could affect Bitcoin, even though it is not issued or backed by any government. Political and social factors are expected to play a bigger role in the crypto market, as El Salvador makes Bitcoin legal tender and Iran, Russia double Bitcoin mining as a way to earn foreign currency .